How COVID Changed the Retail and Restaurant Industry Forever
Few have been as transformed by the COVID-19 pandemic as the retail and restaurant industries. Within weeks of the outbreak, restaurants around the world were closed. Many never reopened, but a few thrived. As we reach the other side of the crisis, we find an industry and consumer profoundly changed.
Techonomy and Lightspeed, an omnichannel-focused commerce company with a global roster of merchants, recently held a roundtable in New York City that addressed the changing landscape. The event brought to the table restaurateurs, industry analysts, service worker representatives, and journalists covering the retail industry. These were some of the key takeaways.
The Consumer Retail Experience Will Be Everywhere
“Consumers are no longer siloed in online and offline experiences,” says Lightspeed CEO JP Chauvet. He says Lightspeed has been talking to customers about omnichannel selling since its founding 17 years ago. “Now, COVID has made solutions like ours a must-have for the entire industry, triggering a lot of our growth and adoption.”
The Retail Industry Is Still Technically Primitive
“We have thousands of customers, but there are 47 million retailers worldwide,” Chauvet says. “The vast majority of the retailers and restaurants still use registers with proprietary databases. I think many of them are wondering how to succeed, and we can teach them how to reap the most out of their business.”
Takeaway Is Here to Stay
Nimble restaurateurs that adjusted their offerings, from new menu items to introducing delivery and curbside pickup options, remained resilient. Their willingness to adapt has kept them in business whilst steadfast competitors closed their doors. One guest, with two small children, found it difficult to make time to dine out. When their preferred restaurants began offering delivery, they were able to enjoy a fine-dining experience at home. “They staple reheating instructions to the bag,” he explained.
Ghost Kitchens Are Probably Going Away
During the pandemic, many restaurants invested in ghost kitchens as operators looked for ways to make money outside their existing footprints. Most of those efforts are over now, as they were unable to be staffed long-term. “We can’t hire staff for our restaurants; how are we going to staff our ghost kitchens,” explained one restaurateur.
Social Commerce Comes With Conflicts
Many retailers and restaurants are trying to leverage social platforms to market their products and services. The problem here is that social media platforms are designed to optimize the time spent on the service. Retailers simply want to drive a sale as quickly and efficiently as possible. These two priorities can often conflict. That said, there are ways for creators to creatively leverage platforms to drive sales, but it does require effort.
Same-Day Delivery Offers Diminishing Returns
Many retailers have attempted same-day deliveries, but most find it too expensive. Even big brands like Amazon and Walmart have limited their same-day inventory. Brands that continue to offer this service need to partner with services like Uber, which may not be profitable. Ironically, the supply chain problems that arose during and after the pandemic have conditioned users to expect slower delivery times.
People are going out again, but there are not enough people to serve them. One restaurateur complained they simply didn’t have the labor to supply the service to returning crowds. If they are staffed at 80%, the existing crew must work at 120% capacity to deliver service.” This results in angry customers and disgruntled employees. It takes a toll on morale. “We have people calling in the next day and saying: ‘I’m not coming into work today because yesterday was too stressful.’”
And it isn’t just affecting restaurants, but all parts of the service industry. “Our local Starbucks has been closing at five o’clock because it can’t get enough employees to stay open,” said Josh Kampel, CEO of Clarim Media, which hosted the event. “It seems that every business is expected to do more with less resources.”
Remote Work Has Reached the Masses
Working from home used to be reserved for knowledge workers, but a new breed of work-at-home employee has emerged during the pandemic. Entry-level, work-at-home jobs are out there. One guest who used to run a call center explained, “If I tell you now that I’m going to give you a Chromebook and you can work from home 40 hours a week at a better wage than you make in a tough job in a restaurant, you are going to take it,” she explained.
The Workforce Shortage Is Here to Stay
The totality of the U.S. workforce is much more sensitive than anyone thought. COVID-19 deaths removed two-million people from the workforce. It also forced two million people to retire early. Immigration to the United States has declined since 2000. Add in the fact that the country’s high school graduation population will begin to decline after 2027. It is clear that the retail and service industry’s labor market will be short-handed for years. “The marginal worker has left the workforce,” summarized one guest.
According to Lightspeed CEO JP Chauvet, restaurants will have to change their routines if they want to survive. “With fewer people available for hire, restaurants will have to automate everything they can. They also need to look for new revenue streams,” he explained.